The problem with Bitcoin is that it’s not completely anonymous, because everything is recorded on a publically shared global ledger (the blockchain).
Know that if you leave a digital trail (such as an email address, government ID or a utility bills), then it is only a matter of enough dedicated time and resources to de-anonymize your transactions on Bitcoin’s blockchain.
And that’s why more and more people are trying to find ways to get Bitcoins without using an ID.
To support such demands, some companies allow you to use their services without verifying your identity. This means that no personal details need to be provided during registration.
Anonymous Bitcoin exchanges are great for people who want to enhance their anonymity when they interact with the Bitcoin network, because in most of the cases you just need to provide an email and a password and you can trade instantly.
Advantages of Anonymous Bitcoin Exchanges
The identity verification process at Bitcoin exchanges typically involves providing personal information, such as date of birth, address, name and attaching proof of residence and proof of identity documents. Most of the Bitcoin exchanges also require identity verification process for KYC – know your customer and AML – anti-money laundering – regulation applicable in the country where they are operating.
Many people want to avoid exposing personal information on a Bitcoin exchange, and there are several reasons for that. Users can hide their credentials so no authorities, be it tax authority or government will be able to see their profits, investments, and losses in Bitcoins. It is also possible that you just want to hide proceeds from various people, such as employees, creditors, or even spouses for different personal reasons. Other people then just do not trust the platform enough to provide their credentials to the people who own the site.
On the other hand, some exchanges also require providing various documents in order to prove your identity, such as a photo ID, driver’s license, or passport and also a proof of residence. It takes some time to validate this information. At anonymous Bitcoin exchange you do not have to wait until the verification process goes through approval at the platform, which means that you can start trading right away after sign up.
Disadvantages of Anonymous Bitcoin Exchanges
The largest limitation of anonymous Bitcoin exchanges is that they apply a certain threshold for unverified users both in terms of daily or lifetime withdrawals and trading volume, which can cause potential issues to those who would like to engage in trading activity anonymously with a high amount of funds.
Also, this extra anonymity comes with a cost, and these methods are 5- 10% more costly than other conventional ways of purchasing Bitcoins.
Completely Anonymous Bitcoin Exchanges
At completely anonymous Bitcoin exchange platforms users do not have to provide any type of personal information in order to engage in trading activity. However, some of these platforms limit the amount of available funds to users or the different types of withdrawal and deposit methods for unverified users.
Whaleclub.co – This is not really an exchange but a trading platform that allows users to trade anonymously without having to reveal their identity. It charges NO FEES for trading different crypto currencies and also stocks and commodities on the platform. Bitcoin and Dash are the only two cryptocurrencies that are supported.
BitQuick – BitQuick doesn’t require verification to buy or sell Bitcoins. In fact, users don’t even have to open an account to make a trade, and they only need to provide an email and enter an external wallet address. Sellers have to fill a form that requires a few information about them. However, the process does not involve providing any personal documents to the exchange. In some cases, document submission or the SMS verification may be requested by the platform. However, this is only on a case by case basis.
Bitsquare (aka BISQ) – Bitsquare is a fully decentralized exchange that requires no email ID, name, or verification. To start, all you need to do is download their software, install it, register a password for your wallet and you are ready to trade. Currently, it is available on Windows, Mac, and Linux platforms and supports 126 cryptocurrencies (including BTC). However, trade volumes are low.
Livecoin.net – The verification is only needed for those users who want to place the deposit via bank transfers. Otherwise, verification process is not required on the platform. However, the verification process is not presented publically, and all users who are looking to verify their accounts are directed to the site’s contact page.
LakeBTC.com – Users don’t have to verify their identity in order to trade digital currencies on LakeBTC. However, the verification is required for trading with fiat currencies. One more thing worth noting is that there are no trading limits for unverified accounts.
Read our comprehensive guide on best cryptocurrency exchanges.
Cryptonit – Cryptonit is an exchange service based in London, UK, that lets users use their platform without identity verification. However, for unverified accounts there is a daily limit in the amount 100 EUR.
Wesellcrypto – Upon registration, users have to provide the following to the support team: a location, a full name, how much you expect to buy, and your primary interest in cryptocurrencies. However, the daily purchase amount is limited to $15 a day.
Semi-Anonymous Bitcoin Exchanges
There are a couple of Bitcoin exchanges where you can engage in trading activity right after signing up. However, the registration process involves providing a phone number. These Bitcoin exchanges often apply multiple levels of verifications. On the first level you do not have to provide too much information about yourself just to get started. However, limits are applicable in these cases too.
Coinbase – Coinbase is one of the most popular Bitcoin exchanges. It lets their users use its services without uploading personal documents to the site. As a level 1 user, you just need to provide a phone number and an email to register. The daily trading limits for level 1 user are $25000 of BTC to sell and $5000 of BTC to buy.
Xcoins – During the registration process at Xcoins, users have to enter their country, password, email, and mobile phone number for two-factor authentication (2FA). Users do not have to provide any personal documents. Also, no limits are applicable on the platform for unverified users.
Buysomebitcoins – In order to register at Buysomebitcoins, you have to enter your full name, phone number, country of origin, and the password and your account is created. For unverified users, the account limit is topped at $250.
Kraken – As a Tier 1 user at Kraken Bitcoin exchange, withdrawals and deposits are available in digital currency only. However, you can trade with both digital and fiat currencies without verification. The necessary personal information for registration includes full name, phone number, country of residence, and date of birth. Deposits in cryptocurrencies don’t have a limit. On the other hand, withdrawals are limited to $2,500 per day and $20,000 per month.
Peer-to-Peer (P2P) Bitcoin Exchanges
Currently, there are two major platforms available on the market that enable peer-to-peer (P2P) Bitcoin trading – LocalBitcoins and Paxful . At P2P Bitcoin exchanges, you can purchase and sell Bitcoins directly from private individuals, and you can also keep a low profile and do not share any personal details during the purchase process.
LocalBitcoins – LocalBitcoins is a Bitcoin start-up based out of Helsinki, Finland. It has been operating since 2012 and has on the ground buyers and sellers in nearly 15,000 cities across the world. You can meet sellers online and execute a trade offline, you can pay in cash or send them money via SEPA or PayPal or wire transfer or direct bank deposit (all depending on the seller). LocalBitcoins respects the anonymous nature of Bitcoin. This means that the ID verification process is not mandatory. To sign up, you need to provide an email address, but you can simply bypass this using an alias email. The exchange doesn’t require any personal details. However, some buyers or sellers may request identification in order to proceed with the trade.
Paxful – Setting up an account on the site is easy and can be done in two ways: directly by filling the registration form available on their website, or automatically, after providing an email not yet registered in their database during the checkout in a purchasing process. Users are asked to click the confirmation link sent to the registered email, and to set two security questions. They can also verify their phone number and activate SMS notifications. They can opt for being notified of a broad range of activity related to their account via email. However, only alerts about critical movements are sent via SMS.
All the exchanges described above don’t require you to use an ID verification to purchase Bitcoins. However, with more sophisticated techniques, you can be tracked.
You might accidentally disclose your Bitcoin public address online somewhere, or you can be identified by your IP or through the private Wi-Fi that you are using, or a seller might track you down from your mobile or vehicle number when you did your face-to-face Bitcoin/fiat deal with them.
These are possible methods of demasking anonymity. For more serious users of Bitcoin, I suggest they read our guide 6 Ways To Guarantee Anonymity When Making Bitcoin Transactions.
Thanks for checking out our review of the Best Bitcoin Exchanges for Anonymous Trading.
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com